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Scott’s Liquid Gold-Inc. Reports First Quarter Results

First Quarter 2022 Highlights:

  • First quarter 2022 net sales of $5.8 million vs. $9.4 million in 2021
  • Net loss of $0.5 million in Q1 2022 vs. $0.3 million in 2021

Scott’s Liquid Gold-Inc. (OTC: SLGD) today announced results for the three months ended March 31, 2022.

First Quarter Financial Results

In the first quarter of 2022, net sales decreased due to the sale of the Dryel brand and the conclusion of our agreement to distribute Batiste products, which collectively represented $2.5 million in sales in the first quarter of 2021. BIZ sales declined due to supply chain issues with our powder booster products. Sales of our Alpha Skin Care products decreased due to the lockdowns in China, which impacted our ability to export those products. Our Kids N Pets and Messy Pet brands experienced slight increases in sales versus the first quarter of 2021 due to targeted marketing efforts.

Our net loss of $0.5 million was primarily driven by amortization of intangible assets, interest expense, and continued inflationary impacts associated with the manufacture and distribution of our products. In addition to high logistics-related expenses, the rising cost of fuel negatively impacted our inbound and outbound transportation rates.

Management Commentary

“We are proud of our team for their efforts to help mitigate the volatile and challenging environment,” said Tisha Pedrazzini, President of Scott’s. “While inflation continues to impact operating costs and supply chain remains uncertain, we’ve launched new line extensions that we believe set the foundation to deliver on our future growth plans. We continue to focus on both sales growth initiatives and cost structure efficiencies to drive profit improvements in the short and long term.”

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Consolidated Statements of Operations

(in thousands, except per share data)

 

 

 

 

Three Months Ended March 31,

 

 

2022

 

 

2021

 

Net sales

$

5,790

 

 

$

8,844

 

Cost of sales

 

2,856

 

 

 

4,840

 

Gross Profit

 

2,934

 

 

 

4,004

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

Advertising

 

135

 

 

 

159

 

Selling

 

2,204

 

 

 

2,415

 

General and administrative

 

791

 

 

 

1,285

 

Intangible asset amortization

 

105

 

 

 

265

 

Total operating expenses

 

3,235

 

 

 

4,124

 

Loss from operations

 

(301

)

 

 

(120

)

 

 

 

 

 

 

 

 

Interest expense

 

(150

)

 

 

(35

)

Loss before income taxes and discontinued operations

 

(451

)

 

 

(155

)

Income tax benefit

 

-

 

 

 

41

 

Loss from continuing operations

 

(451

)

 

 

(114

)

Loss from discontinued operations, net of taxes

 

-

 

 

 

(166

)

Net loss

$

(451

)

 

$

(280

)

 

 

 

 

 

 

 

 

Basic and diluted net loss per common shares:

 

 

 

 

 

 

 

Loss from continuing operations

$

(0.04

)

 

$

(0.01

)

Loss from discontinued operations

$

-

 

 

$

(0.01

)

Net loss

$

(0.04

)

 

$

(0.02

)

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic and diluted

12,739

 

 

 

12,618

 

 

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Consolidated Balance Sheets

(in thousands, except par value amounts)

 

 

March 31,

 

 

December 31,

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash

$

22

 

 

$

770

 

Restricted cash

 

375

 

 

 

500

 

Accounts receivable, net

 

2,399

 

 

 

3,516

 

Inventories

 

6,174

 

 

 

5,677

 

Income taxes receivable

 

320

 

 

 

320

 

Prepaid expenses

 

422

 

 

 

436

 

Total current assets

 

9,712

 

 

 

11,219

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

5

 

 

 

7

 

Goodwill

 

1,710

 

 

 

1,710

 

Intangible assets, net

 

5,153

 

 

 

5,160

 

Operating lease right-of-use assets

 

2,675

 

 

 

2,735

 

Other assets

 

38

 

 

 

38

 

Total assets

$

19,293

 

 

$

20,869

 

 

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

$

2,289

 

 

$

2,647

 

Accrued expenses

 

693

 

 

 

747

 

Current portion of long-term debt

 

840

 

 

 

1,000

 

Operating lease liabilities, current portion

 

259

 

 

 

251

 

Total current liabilities

 

4,081

 

 

 

4,645

 

 

 

 

 

 

 

 

 

Long-term debt, net of current portion and debt issuance costs

 

1,321

 

 

 

1,876

 

Operating lease liabilities, net of current

 

2,711

 

 

 

2,780

 

Other liabilities

 

27

 

 

 

27

 

Total liabilities

 

8,140

 

 

 

9,328

 

 

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

 

 

Preferred stock, no par value, authorized 20,000 shares; no shares issued and outstanding

 

-

 

 

 

-

 

Common stock; $0.10 par value, authorized 50,000 shares; issued and outstanding 12,749 shares (2022) and 12,727 shares (2021)

 

1,275

 

 

 

1,273

 

Capital in excess of par

 

7,850

 

 

 

7,789

 

Retained earnings

 

2,028

 

 

 

2,479

 

Total shareholders’ equity

 

11,153

 

 

 

11,541

 

Total liabilities and shareholders’ equity

$

19,293

 

 

$

20,869

 

 

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Consolidated Statements of Cash Flows

(in thousands)

 

 

 

 

March 31,

 

 

2022

 

 

2021

 

Cash flows from operating activities:

 

 

 

 

 

 

 

Net loss

$

(451

)

 

$

(280

)

Adjustments to reconcile net loss to net cash (used) provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

164

 

 

 

453

 

Stock-based compensation

 

63

 

 

 

69

 

Deferred income taxes

 

-

 

 

 

(97

)

Change in operating assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable

 

1,117

 

 

 

(860

)

Inventories

 

(497

)

 

 

(738

)

Prepaid expenses and other assets

 

14

 

 

 

146

 

Accounts payable, accrued expenses, and other liabilities

 

(414

)

 

 

1,653

 

Total adjustments to net loss

 

447

 

 

 

626

 

Net cash (used) provided by operating activities

 

(4

)

 

 

346

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

Purchase of software

 

(99

)

 

 

-

 

Net cash used in investing activities

 

(99

)

 

 

-

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

Proceeds from revolving credit facility

 

8,379

 

 

 

8,730

 

Repayments of revolving credit facility

 

(7,899

)

 

 

(8,830

)

Repayments of term loan

 

(1,250

)

 

 

(250

)

Net cash used in financing activities

 

(770

)

 

 

(350

)

 

 

 

 

 

 

 

 

Net decrease in cash

 

(873

)

 

 

(4

)

 

 

 

 

 

 

 

 

Cash and restricted cash, beginning of period

 

1,270

 

 

 

5

 

Cash and restricted cash, end of period

$

397

 

 

$

1

 

 

 

 

 

 

 

 

 

Cash and restricted cash, end of period associated with discontinued operations

$

-

 

 

$

-

 

Cash and restricted cash, end of period associated with continuing operations

$

397

 

 

$

1

 

 

 

 

 

 

 

 

 

Supplemental disclosures:

 

 

 

 

 

 

 

Cash paid during the period for interest

$

95

 

 

$

86

 

Note Regarding Forward-Looking Statements

This news release may contain "forward-looking statements" within the meaning of the federal securities laws that are intended to qualify for the Safe Harbor from liability established by the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" generally can be identified by the use of forward-looking terminology such as "assumptions," "target," "guidance," “strategy,” "outlook," "plans," "projection," "may," "will," "would," "expect," "intend," "estimate," "anticipate," "believe”, "potential," or "continue" (or the negative or other derivatives of each of these terms) or similar terminology.

Forward-looking statements convey our expectations, intentions, or forecasts about future events, circumstances, or results. All forward-looking statements, by their nature, are subject to assumptions, risks, and uncertainties, which may change over time and many of which are beyond our control. You should not rely on any forward-looking statement as a prediction or guarantee about the future. Actual future objectives, strategies, plans, prospects, performance, conditions, or results may differ materially from those set forth in any forward-looking statement. Some of the factors that may cause actual results or other future events or circumstances to differ from those in forward-looking statements are described in the Company's Annual Report on Form 10-K for the year ended December 31, 2021 and the Company's subsequent Quarterly Reports on Form 10-Q and other periodic reports filed with the Securities and Exchange Commission. Any forward-looking statement made by us or on our behalf speaks only as of the date that it was made. We do not undertake to update any forward-looking statement to reflect the impact of events, circumstances, or results that arise after the date that the statement was made, except as required by applicable securities laws. You, however, should consult further disclosures (including disclosures of a forward-looking nature) that we may make in any subsequent filings with the Securities and Exchange Commission.

About Scott’s Liquid Gold-Inc.

Scott’s Liquid Gold-Inc. (SLG-Inc.) is a leading manufacturer and marketer of consumer products sold nationally and internationally to retail channels over the last 70 years. SLG-Inc. markets and distributes some of the most trusted and recognized consumer brand names, including its namesake wood cleaning products; Alpha Skin Care®; Kids N Pets®; Messy Pet®; BIZ®; Denorex®; Prell® and other brands.

Contacts

David Arndt

Chief Financial Officer

303.576.6027

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